Investors looking for a stable play in retail don’t have many places left to turn, and as consumer opinions grow even more fickle, placing big bets on brand names is more than the average stock broker can take.
However, Jim Cramer thinks there’s still one area of retail that’s safe enough for some investment action, and it can’t be found anywhere near Fifth Avenue.
According to the CNBC pundit, dollar stores are the safe haven of investing in retail, primarily because of recent changes to the overall industry and individual bright spots in the two large remaining players in the field: Dollar Tree and Dollar General.
“I think this is one part of retail that still has a lot of upside,” Cramer said on his show, “Mad Money.” “Put it all together, and this is a strong environment for Dollar Tree and Dollar General, and the truth is that I like both companies a great deal.”
The landscape of the dollar store field changed dramatically over the summer when Dollar Tree acquired Family Dollar for $8.5 billion, absorbing the second-largest company in the industry in the process. While that may have given Dollar Tree more resources and more market share, Cramer believes that it’s actually the smaller Dollar General that shows more promise for growth in the immediate and long-term future.
“All things considered, if you like the dollar store space, I think that General Dollar is the safest, smartest way to play it right now,” Cramer said.
Investing based on what’s said on TV isn’t always the smartest idea, but if high-end names have been jumping all over the market lately, this one bright spot in retail might be worth checking out and holding onto as customers get their fill on low-price quality goods over the holidays.